WASHINGTON (Dow Jones)--In the next several months, Congress is likely to pass a bill requiring greater use of renewable power, while proposals for capping greenhouse gas emissions remain a subject of debate.
As lawmakers argue about the extent of carbon caps and what type of market-based climate change program should be used, support is fairly strong in both parties for legislation establishing a federal renewable portfolio standard, or RPS.
Wind turbine manufacturers such as General Electric Co. (GE), Siemens Corp. (SI), Denmark's Vestas Wind Systems, New Zealand's state-owned Genesis Energy (GEL) and power companies like FPL Group Inc. (FPL) that own a lot of wind farms, stand to benefit, said Prudential Equity Group analyst James Lucier.
In addition to wind turbine manufacturers, developers of new electric transmission infrastructure and private wind power developers could also benefit from a federal RPS.
"An RPS can almost certainly be done this year," Lucier said, adding that he sees Congress passing a bill by July 4. "It's one of the few things investors can count on in this Congress."
Sen. Jeff Bingaman, D-N.M. and the new chairman of the Senate Energy and Natural Resources Committee, is crafting a bill that would require 15% of the
nation's power to come from renewable energy sources such as solar, geothermal and wind power by 2020.
Bingaman - a long-time advocate for federal renewable energy requirements -and other senators are expected to advance the legislation this spring.
Establishing a federal renewables requirement is a top legislative priority for Senate Democrats as well as Senate Republicans, noted Bingaman spokesman
Bill Wicker.
"I would expect early action," Wicker said.
Duke Energy Corp. (DUK) Chief Executive Jim Rogers said he thinks Congress is likely to act swiftly on the issue.
"I think this Congress is moving," he told reporters after a recent Senate hearing. "I think there's a high probability they address an RPS."
Shift In The House
Over the past decade, RPS proposals have repeatedly died in the House despite Senate support.
Most recently, the Senate approved a renewable energy requirement in 2005 as part of the Energy Policy Act of 2005. But it was blocked in the House mainly due to opposition by Rep. Joe Barton, R-Texas, former chairman of the House Energy and Commerce Committee.
With Democrats now in control of the House, such proposals are more likely to succeed.
"The politics have shifted in the House," said Marchant Wentworth, the legislative representative for clean energy at the Union of Concerned Scientists. "There's new support and new understanding."
House energy committee Chairman John Dingell, D-Mich., has previously supported an RPS. It's not clear if a renewable energy mandate will be included, but he is working with other lawmakers to craft an energy bill by June.
Meanwhile, a bipartisan group of lawmakers recently introduced legislation to create federal RPS requiring electric utilities to acquire 20 percent of their retail electricity from wind, solar and other renewable energy sources by 2020. Sponsors include Reps. Tom Udall, D-N.M., Todd Platts, R-Penn., Frank Pallone, D-N.J., and Chris Shays, R-Conn.
Twenty-one states plus the District of Columbia have implemented renewable energy standards, with more states poised to follow.Minnesota Gov. Tim Pawlenty signed a law Thursday requiring utilities to generate 25% of their power from renewable sources.
Several new members of the House touted clean energy on the campaign trail and are ready to follow through on their promises. And reaching consensus on an RPS proposalis likely to be much easier for Congress than agreeing on policies that would limit carbon emissions.
Increasing use of renewables is not as aggressive a weapon against carbon as proposals to cap emissions, but an RPS is seen as a significant step toward improving the climate.
"The way to think about it is an RPS is an easy down payment on the carbon reductions you're going to need for an effective climate policy," said Wentworth.
Possible Challenge
The Bush administration has opposed a federal RPS, arguing that such mandates are better made at the state level. Energy Secretary Samuel Bodman recently told a Senate hearing that if Congress passed a federal mandate, he would recommend that the president oppose it.
Still, American Wind Energy Association Executive Director Randall Swisher said he thinks RPS legislation will succeed anyway.
As the governor of Texas, President George W. Bush backed a state RPS that "is probably the single most effective standard" on the books, said Swisher. "I think he understands. I know their official position is to oppose it but let's see what happens."
An RPS is the most significant action Congress can take to encourage greater investment in wind power, Swisher said.
"There are billions of dollars of investment on the sidelines" waiting to see if the U.S. will commit to wind power, he said. He added that an RPS would give investors the comfort they need to see the industry as strong and stable over the long term.
Source: Maya Jackson Randall, Dow Jones Newswires; 202-862-9263; Maya.Jackson-Randall@dowjones.com